Question

The City of Duncanville has four potential component units. The finance department staff is trying to determine which, if any, of these entities to include in the city’s financial reporting entity. For each entity that is included in the city reporting entity, the staff must also determine whether it must be blended or discretely presented.

Additional Information1. The Duncanville School District has a separately elected school board that governs the school district. By law, all school board members must reside within the Duncanville city limits. The district establishes its own budget, but its property tax levy must be approved by the Duncanville City Council. The city does not guarantee the debt of the schools or have any other authority over the school district.2. The Greater Duncanville Natural Gas Cooperative is governed by a seven-member board. The city appoints the seven members of the utility’s governing board and can remove them at will. The city approves the cooperative’s budget as well as its rate structure. The utility cannot issue bonded debt without the city council’s approval. The city is entitled to, and regularly receives, the operating surpluses of the utility.3. The Duncanville Library District owns and operates all public libraries in the City of Duncanville. The members of the Duncanville City Council are designated by the District’s charter as the board members of the Duncanville Library District. The district receives most of its funding from the city, and the city guarantees the district’s long-term indebtedness.4. The Duncanville Financing Authority’s governing board is appointed by the city council. The Authority provides the financing for most of the city’s water and wastewater projects. The Authority’s resources come from lease agreements with the Water and Sewer Department of the City of Duncanville. The Authority does not provide financing arrangements for any other entities.The funds and other accounts that each of these four entities uses for accounting and financial reporting (in its separate report) are as follows:• Duncanville School District—General Fund, Special Revenue Fund, Capital Projects Fund, General Capital Assets and General Long-Term Liabilities accounts• Greater Duncanville Natural Gas Cooperative—Enterprise Fund• Duncanville Library District—General Fund, Special Revenue Fund, Permanent Fund, General Capital Assets and General Long-Term Liabilities accounts• Duncanville Financing Authority—Enterprise Fund

RequiredEvaluate each of these four legally separate entities. For each entity, determine (and explain your conclusions):a. If it is a component unit of the City of Duncanville.b. How each component unit identified will be reported in the government-wide financial statements.c. How each component unit identified will be reported in the fund financial statements.